Chancellor Jeremy Hunt is reportedly considering reducing the 25% exit fee on lifetime individual savings accounts (LISAs) in the upcoming spring budget.
According to Politico, the March 6 budget could see the 25% exit penalty reduced to 20% as the government looks to encourage saving and entice voters before the next election.
Limits on the value of property that can be purchased using LISAs are set to be hiked from £450,000 to £500,000 meanwhile, in a bid to reflect increased house prices in recent years.
LISAs allow people between the ages of 18 and 39 to lock away £4,000 a year tax-free for a first house or pension, with a government bonus of up to £1,000 also being applied.
However, consumer advocates have previously argued that the 25% exit penalty can result in savers losing out on their own original investment, alongside the bonus.
In a post on X, MoneySavingExpert’s Martin Lewis committed: “If true, this'd fix the current dire system whereby when people are priced out and have to buy a home above £450,000 limit, the state fines them to get access to their cash.”
Lifetime ISA win coming in budget?!
Good news! @POLITICOEurope has a scoop by @JamesFitzJourno that Chancellor will follow my suggestion and wipe the 6.25% Lisa withdrawal fine for anyone buying a home. If true, this'd fix the current dire system whereby when people are priced… pic.twitter.com/FtV7bYpH16
— Martin Lewis (@MartinSLewis) February 22, 2024